{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

"M351 Notes-Day 18 Dilutive and EPS 02-25

"M351 Notes-Day 18 Dilutive and EPS 02-25 -...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
M351 Notes, Class 18: Dilutive Securities and EPS, pages 827-834 A. Restricted stock compensation transfers shares of stock to employees. The restricted shares cannot be sold, transferred, or pledged until the award vests (usually 3 to 5 years). During the vesting period, the company recognizes compensation expense on a straight-line over the vesting period. Compensation expense is usually measured as the market value of the restricted shares on the grand date. Assume ABC Company awards an employee 10,000 restricted shares on April 1, 2007, when the market price of the stock is $15 per share. The restricted stock vests in 5 years and has a par value of $4 per share. April 1, 2007 entry : Unearned compensation ($15 x 10,000) ............... 150,000 Common stock ($4 x 10,000) ......................... 40,000 Paid in capital in excess par ([$15 - $4] x 10,000) 110,000 December 31, 2007 entry : Compensation expense* ....................................... 22,500 Unearned compensation ................................. 22,500 *($150,000/5) x 9/12 1
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
If the employee leaves the company prior to vesting, the compensation
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: expense is reversed. Assume the employee awarded the restricted stock leaves on June 30, 2009 ($22,500 + $30,000 = $52,500 was recognized as compensation expense in 2007 and 2008). June 30, 2009 entry : Common stock. ..................................................... 40,000 Paid-in capital in excess par. ................................ 110,000 Compensation expense. .................................. 52,500 Unearned compensation. ................................ 97,500 B. Stock appreciation rights (SARs) grant the employee the appreciation (if any) in stock price between the grant date and the exercise date. Stock appreciation rights may be paid in cash, stock or both. See the example on pages 828 and 829 for a demonstration of the recognition of expense for SARs. C. The comprehensive EPS illustration in Appendix B on pages 830-834 can be a useful tool for identifying what you need to know for EPS calculations and presentations. 2...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern